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Tesla Skeptic Andrew Left Is Now Long on ‘Proven Hit’ Model 3

(Bloomberg) -- A prominent short seller who’s been betting against Tesla Inc. has changed his tune and sent the shares surging by saying it’s “smoking” the rest of the auto industry.

Citron Research’s Andrew Left, a vocal and long-term Tesla short, said in a report Tuesday that the electric-car maker is snatching customers from BMW, Mercedes, Toyota and Honda. In a Bloomberg Television interview, he said Chief Executive Officer Elon Musk has distracted investors from a company that’s turning a corner.

“Elon Musk has made such a sideshow of himself that people started to forget about -- including myself -- the underlying business,” Left said on Bloomberg TV. “It’s a revolution that I actually underestimated -- the way people are buying these cars.”

Tesla surged 13 percent a day before it’s due to report earnings. Musk, 47, told employees as the quarter was coming to an end last month that the company was “very close to achieving profitability and proving the naysayers wrong.” In addition to making money, he’s predicted that Tesla will be cash flow positive, a turnabout from the billions of dollars it was burning while struggling to ramp up Model 3 production starting last year.

In scheduling earnings for Wednesday -- earlier than it has in the past -- Tesla sent a signal to some on Wall Street that it has good news to share. Adam Jonas, an analyst at Morgan Stanley, wrote that it’s more likely to be a positive than negative sign and said he’s expecting the company to forecast strong profit and cash flow for the fourth quarter. Citron Research tweeted a similarly bullish theory.

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Left, 48, made headlines last month by suing Tesla and Musk over his Aug. 7 tweets about trying to take the company private. Left claimed that Musk issued false and misleading information to manipulate Tesla’s stock price and hurt short sellers.

“It’s just business,” Left said of his lawsuit against Musk on Bloomberg TV. “On that particular day, I was short the stock. He said ‘funding secured.’ Funding wasn’t secured. I want my money back.”

Citron has held a long-term short position on Tesla and predicted back in March that supply-and-demand problems would send the company’s stock price to $100 by year-end.

“While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry,” Left wrote in his report. “While everyone is focused on Elon smoking weed, he is quietly smoking the whole automotive industry.”

--With assistance from Scarlet Fu and Caroline Hyde.

To contact the reporters on this story: Molly Kissler in New York at mkissler@bloomberg.net;Dana Hull in San Francisco at dhull12@bloomberg.net

To contact the editors responsible for this story: Lauren Berry at lberry4@bloomberg.net, ;Craig Trudell at ctrudell1@bloomberg.net, Clementine Fletcher, David Welch